Bernard Madoff finally revealed yesterday how he pulled off an unprecedented $65 billion investment fraud, pleading guilty to the world's biggest swindle before being hauled off to a federal jail where he's been assigned a new identity: Prisoner No. 61727-054.
"I am so deeply sorry and ashamed," Madoff, 70, told Manhattan federal Judge Denny Chin in a hushed courtroom packed with reporters and more than a dozen victims of his Ponzi scheme.
"As I engaged in my fraud, I knew what I was doing was wrong, indeed criminal . . . I am painfully aware that I have deeply hurt many, many people."
Madoff then told the story of his unparalleled scam.
"To the best of my recollection, my fraud began in the early 1990s," he said. "I never invested" clients funds, he admitted.
"Instead, those funds were deposited in a bank account at Chase Manhattan Bank. When clients wished to receive the profits they believed they had earned with me or to redeem their principal, I used the money in the Chase Manhattan Bank account that belonged to them or other clients."
He said pressure he felt to provide investors an exceptional profit rate led him to operate as a Ponzi scheme from the get-go.
"I believed it would end shortly, and I would be able to extricate myself and my clients from the scheme," he said. "However, this proved impossible, and as the years went by, I realized that my arrest and this day would inevitably come."
His thousands of victims include charities, retirees, the owners of the New York Mets, actors Kevin Bacon and Kyra Sedgwick and Nobel Prize-winning Holocaust survivor Elie Wiesel.
As Madoff confessed to his crimes, he suggested that only he was to blame, a claim scoffed at by many.
Indeed, many questions remain, including who helped Madoff pull off the massive scheme and whether his wife, Ruth, will have to surrender $70 million in assets, including a penthouse, that she claims belong to her, not her husband.
"I don't think anyone's satisfied, because he's continuing to deny that other people were involved . . . and I don't think that's true," said lawyer Brad Friedman, whose firm represents more than 100 Madoff victims.
Madoff could spend the rest of his life behind bars after he is sentenced June 16.
Until then, he will remained locked up in the Metropolitan Correctional Center with other lowlifes instead of the $7 million Upper East Side penthouse apartment, where he had been allowed to stay ever since his Dec. 11 arrest.
"It's about time. Thank you, judge," said Madoff victim Mark LaBianca after Chin revoked the swindler's $10 million bond.
Chin's move drew applause from other victims on hand.
When Madoff walked into the courtroom at 9:48 a.m., he avoided the hostile gazes of the 15 victims packed into the first three rows. He gulped some water and nervously blinked, but when he spoke, his voice was steady.
When Chin asked if Madoff understood that there was a recommended 150-year sentence for his crimes, Madoff grimaced and bit his lip before saying, "I do."
Madoff then replied, "Guilty" 11 times to the fraud, money-laundering, perjury and theft charges.
Afterward, Chin allowed several victims to speak, including George Nierenberg, who stepped away from the podium and addressed Madoff, saying, "I don't know whether you had a chance to turn around and look at the victims," before the judge admonished him.
Defense lawyer Ira Sorkin argued that Madoff should be allowed to remain free pending sentencing, saying his client was "neither a flight risk, nor a risk to the community."
The gallery burst into derisive laughter when Sorkin noted that a private security firm had been keeping tabs on Madoff's whereabouts "at his wife's own expense."
Sorkin's argument fell flat with Chin, who said, "As Mr. Madoff has pled guilty, he is no longer entitled to the presumption of innocence.
"The exposure is great - 150 years in prison. In light of Mr. Madoff's age, he has an incentive to flee, he has the means to flee, and thus, he presents a risk of flight. Bail is revoked, and the defendant is remanded."
Sorkin is appealing the bail revocation. It is not clear when the Manhattan Second Circuit Court of Appeals will hear the matter.
As federal officers hauled him off to jail, Madoff "was like a zombie," one source said.
"He didn't say a word. He was absolutely devoid of any emotion" as they fingerprinted him and led him into his new home, the source said.
Additional reporting by Murray Weiss
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